Women Negotiate Salary If They Know It's Negotiable

Published 7:00 pm, Sunday, January 6, 2013

Study Finds the Word "Negotiable" in a Job Ad Prompts Women to Negotiate

By Sarah Shemkus, Salary.com contributing writer.

Women earn less than men. Estimates vary, but a recent report by the Institute for Women's Policy Research put women's earnings at about 82 percent of what their male counterparts make.

Many theories have been proposed to explain this discrepancy: Women take time off to raise families and thus don't increase earnings as quickly as men. Women tend to choose jobs in lower-paying fields. Sexism leads employers to offer women less money. Women are less aggressive negotiators than men.

Now, a new study from the National Bureau of Economic Research in Cambridge, Mass. suggests the last factor may be more complicated than it seems. In certain circumstances, in fact, women may be even MORE likely to haggle for a higher salary, found researchers Andreas Leibbrandt and John List.

"When we explicitly mention the possibility that wages are negotiable, women are more likely to negotiate," the study explains.

Leibbrandt and List posted job advertisements seeking an administrative assistant in nine major U.S. cities. When job-seekers responded to the ad, they were sent a questionnaire and a follow-up letter. In half the cases potential applicants were told the pay rate was $17.60 per hour; in the other half they were quoted that wage but also told that the pay was negotiable.

In both cases, men were more likely than women to complete the questionnaire, officially applying for the position. When told salary was negotiable, however, the gender gap in applicants dropped by nearly half (14.7 percentage points to 8.2 percentage points). Women were more likely to apply -- and men less likely -- when told there was wiggle room in the pay rate, and women were far more likely to make a bid for a higher wage.

"The gender gap in applications is much more pronounced for jobs that leave negotiation of wage ambiguous," according to the study.

But what about actual negotiations? Who negotiated, and under what circumstances?

Among those applicants simply told the pay rate, men were far more likely to attempt negotiations than women. However, when told that the wage was negotiable, the distribution changed: Women became slightly more likely than men to request more pay.

"I find it fascinating that simple manipulations of the contract environment (e.g. simply adding the word 'negotiable') might have a tremendous impact on the gender gap," Leibbrandt wrote in an e-mail.

This research, however, should not be taken as a call to create policies that treat the sexes differently, he said. More research is needed to fully understand the effects observed in this study.

Another question that is unresolved is why women prefer concrete rules for negotiating over the ambiguity that men seem to like.

"There is considerable evidence that women are risk-averse, whereas men are rather risk-takers," Leibbrandt wrote.

But why? Is it something women are born with, or has the environment shaped them? Leibbrandt is unsure, he said, but there is reason to believe that nurture might play a stronger role than nature.

Previous studies, however, suggest that cultures in which women have more power and control, this difference is less pronounced, he said.

"These studies suggest that in matrilineal societies there is less of a gender gap in risk-taking behavior than in patriarchal societies," said Leibbrandt.